As an Amazon FBA seller, you know that tracking the right metrics is essential to success. However, there are many different metrics to track, and it can be challenging to know where to start.
In this post, we'll cover the most essential Amazon seller metrics for FBA businesses. We'll discuss each of these metrics in more detail and explain how to track them. These metrics will help you measure your performance, identify areas for improvement, and make better decisions about your business.
The Most Important Amazon Seller Metrics for FBA Businesses
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What Are Amazon Seller Metrics?
Amazon FBA business seller metrics are a set of performance indicators that show how well a seller is performing on the platform. To monitor the performance and success of their FBA business, sellers can track various metrics.
Amazon metrics help sellers find out how their business is performing and understand how to get better results. In addition, seller metrics are used by Amazon to assess the performance of sellers and to determine their eligibility for specific programs and benefits, such as the Buy Box and Amazon Prime.
Why Tracking Amazon Seller Metrics?
Tracking Amazon seller metrics is important for several reasons, as it helps sellers effectively manage their business and maintain good standing with Amazon. Here are some key reasons why tracking Amazon seller metrics is crucial.
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Maximizing profits
Amazon seller metrics can provide you with valuable insights into your business, such as which products are selling well and which products are not. This information can help you make better decisions about your product selection, pricing, and sales strategies. You can increase sales and profitability by making data-driven decisions and optimizing your operations.
Identifying areas for improvement
By tracking your metrics, you can see which areas of your business are performing well and which areas need improvement. This information can help you make informed decisions about allocating your resources and improving your overall performance.
Inventory management
Keeping track of inventory metrics prevents you from overstocking or running out of stock. Effective inventory management is crucial for maintaining sales and avoiding long-term storage fees.
Amazon compliance
Amazon has strict performance standards and policies that sellers must adhere to. Tracking metrics helps ensure you meet these requirements and avoid penalties or account suspension due to policy violations.
Stay competitive
Analyzing metrics related to your pricing and sales rate enables you to stay competitive in your niche. You can identify areas where you need to improve to outperform competitors.
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5 Amazon Metrics Each Seller Must Track
The five most essential metrics for your FBA business include profit, ROI, conversion rate, Inventory Performance Index, and Account Health Rating.
These crucial metrics help FBA sellers make informed decisions, optimize their inventory and pricing, and maintain a healthy and profitable Amazon business. It's essential for sellers to regularly monitor these metrics and take actions to improve their performance when necessary.
Amazon FBA Metrics Sellers Should Track
Profit — How Much You Earn
Profit is the amount of money you make from your Amazon business after all expenses have been paid. In essence, it represents the net income generated from selling products on Amazon. That is the most critical metric for any business, and it's essential to track it on a regular basis to ensure that you're profitable.
You can focus on reducing your expenses or increasing your sales to grow your profit. You can reduce your expenses by negotiating better prices with your suppliers, finding more efficient ways to fulfill orders, and lowering your Amazon fees. You can increase your sales by improving your product listings, offering discounts, and setting competitive prices and shipping rates.
How to calculate profit?
To calculate your profit, you must subtract your total expenses from your total sales. Your expenses include everything from the Cost of Goods Sold to Amazon fees to shipping costs.
Amazon seller profit formula
Amazon seller profit formula
Tip. Calculating Amazon seller profit accurately can be complex due to the various fees, expenses, and taxes involved. Many sellers use tools specifically designed for Amazon sellers to simplify the process and ensure accurate financial tracking, like Seller Assistant App’s FBM&FBA profit calculator. With it, you can see your profit in one click on the Amazon product pages.
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ROI — Investment Profitability
ROI (Return on Investment) is a measure of how profitable your Amazon business is. A high ROI indicates that you're getting a good return on your investment, while a low ROI indicates that you're not making enough money to cover your costs. Typically, anything above 50% is considered a “good” ROI for your Amazon business.
You can focus on increasing your sales and profit or decreasing your investment to improve your ROI. You can increase your profit by following the tips above. You can decrease your investment by reducing inventory levels or using more efficient fulfillment methods.
How to calculate ROI?
To calculate ROI, you must divide net profit by total investment.
ROI formula
ROI formula
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- Net profit is the amount of money you make after all expenses have been paid, including the Cost of Goods Sold, marketing and advertising costs, and operating expenses;
- Total investment is the total amount of money you have invested in your business, including the cost of inventory, equipment, and marketing and advertising costs.
Tip. Seller Assistant App’s FBM&FBA profit calculator will help you quickly and conveniently calculate ROI. It will be displayed on the Amazon product pages.
Conversion Rate — Purchase Rate
Amazon conversion rate (CVR) is the percentage of visitors to your product listings who actually purchase an item. A high conversion rate indicates that your product listings are effective and that you are attracting the right customers. As a rule, a “good” Amazon conversion rate is 10% or higher.
To improve your Amazon conversion rate, optimize your product listings and make sure they are well-written and informative, price your products competitively, and encourage positive customer reviews.
How to calculate the conversion rate?
The conversion rate is calculated by dividing the number of orders placed by the number of page views.
Conversion rate formula
Conversion rate formula
You can find your conversion rate in your Seller Central under Reports > Business Reports > Sales and Traffic > Order Item Session Percentage.
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Inventory Performance Index
The Inventory Performance Index (IPI) is a measure of how well you're managing your inventory on Amazon. It's calculated by taking into account a number of factors, such as on-time shipping rate, cancellation rate, and return rate.
A high IPI can lead to lower storage fees and better shipping performance. A low IPI can lead to higher storage fees and worse shipping performance. An average “good” Amazon IPI is between 400 to 800, and your target IPI must be around 550.
To improve your IPI, you can focus on reducing your cancellation rate, your return rate, and your late shipment rate. You can reduce your cancellation rate by offering accurate product descriptions and shipping estimates. You can reduce your return rate by selling high-quality products and providing excellent customer service. You can reduce your late shipment rate by using a reliable shipping carrier and fulfilling orders quickly.
How to determine the Inventory Performance Index?
Amazon calculates your IPI based on excess inventory rate, sell-through rate, stranded inventory rate, and in-stock inventory.
You can find your conversion rate in your Seller Central Inventory Dashboard under Inventory > Inventory Performance.
Inventory Performance Index
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Account Health Rating
The Account Health Rating (AHR) is a measure of how well you're complying with Amazon's policies and performance standards. It's calculated by taking into account a number of factors, such as your customer feedback rating, your order defect rate, and your late shipment rate.
AHR can have a status of “Healthy,” “At-Risk,” or “Unhealthy.” If your AHR is “Healthy,” your account is not in danger of deactivation.
AHR in the Amazon account health dashboard
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A “Healthy” Account Health Rating is essential for staying in good standing with Amazon and continuing to sell on the platform. An “Unhealthy” Account Health Rating can lead to your account being suspended or even banned. AHR also has a score ranging between 0 and 1000. A “Healthy” AHR is between 200 to 1,000 points.
AHR rates account health in three colors: green is “Healthy"
To increase your Account Health Rating, you can focus on improving your customer feedback rating, order defect rate, and late shipment rate. You can refine your customer feedback rating by selling high-quality products and providing excellent customer service. You can reduce your order defect rate by shipping orders accurately and on time. You can improve your late shipment rate by using a reliable shipping carrier and fulfilling orders quickly.
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How to find out your AHR?
To find out your AHR, go to Performance > Account Health > Policy Compliance in your Amazon Seller Central.
Note. You can proactively avoid Account Health issues with Seller Assistant App’s IP Alert. This feature alerts you if a product has IP claims or any other issues. In addition, it shows the IP complaint type and the date when it was filed. That helps you stay away from the problematic items that can affect your AHR.
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FAQ
How do I maximize my FBA profit on Amazon?
To maximize your FBA profit on Amazon, you must focus on increasing your sales while reducing costs. You can do this by selling high-margin products, optimizing your product listings, pricing competitively, and reducing your Amazon fees and expenses.
What metrics do you consider important for growth Amazon?
The most important metrics for growth on Amazon are profit, ROI, conversion rate, Inventory Performance Index, and Account Health Rating. By improving these metrics, you can increase your sales and visibility on Amazon, leading to long-term growth.
What are Amazon seller metrics?
Amazon seller metrics are performance indicators that track how well an Amazon seller performs on the platform. These metrics are used by Amazon to assess business efficiency and profitability.
What is a good ROI percentage for Amazon FBA?
A good ROI percentage for Amazon FBA is considered to be around 50%. That is higher than expected in e-commerce overall due to Amazon's large and captive audience, efficient fulfillment network, and variety of tools and resources for sellers.
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Final Thoughts
Tracking the most important Amazon seller metrics is essential for FBA businesses to succeed. By monitoring these metrics, you can identify areas where your business is performing well and areas where it needs improvement.
You can also make better decisions about your business, such as which products to sell, how to price them, and how to market them.
Seller Assistant App can help you quickly see profit and ROI. This advanced product research extension offers all the key features you need to determine the most profitable deals to sell on Amazon. It provides an FBM&FBA profit calculator, Quick View, Stock Checker, Restrictions Checker, and other essential features for Amazon product researchers.
Originally published at https://www.sellerassistant.app/blog/the-most-important-amazon-seller-metrics-for-fba-businesses
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